The Asheville Way: Continuous Improvement, Integrity, Diversity, Safety and Welfare, and Excellent Service
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- Vivian Hensley
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1 Ben Fulmer From: Sent: To: Cc: Subject: Thursday, March 12, :47 PM RE: USCC Tip Meeting Thanks all. Derrick W. Swing Human Resources Manager Human Resources Department City of Asheville P.O. Box 7148 Asheville, N.C Think Green! Please do not print this unless necessary The Asheville Way: Continuous Improvement, Integrity, Diversity, Safety and Welfare, and Excellent Service From: Barbara Whitehorn Sent: Thursday, March 12, :55 AM To: Chris Corl Cc: Derrick Swing; Frank McGowan Subject: USCC Tip Meeting Chris, To confirm- we met on January 23, 2015 (Friday) to go over the tipping practices in place at the time at the US Cellular Center. Present at the meeting (in my office, CH room 437): Chris Corl, Barbara Whitehorn, Frank McGowan and Karen Gillespie. Karen reviewed with us current practices which included the use of a tip jar, the tips from which were split between seasonal/temporary employees and the non-profit entity providing volunteers, if non-profit volunteers were used at the event. If there were no volunteers, the tips were split among the seasonal and temporary employees according to their role. Frank and I were very specific in our questions to Karen about who receives tips, and how they are counted and distributed. This was of particular importance because we were evaluating the responsibility of the City for reporting tips received by employees to the IRS. At that time, Karen was clear that no full time employees receive tips. Frank and I are happy to provide further information about that meeting, if needed. Thanks, Barbara Whitehorn Chief Financial Officer Director of Finance and Management Services City of Asheville, NC 1
2 Office: (828) Mobile: (828)
3 Ben Fulmer From: Sent: To: Cc: Subject: Thursday, March 12, :47 PM RE: USCC Tip Meeting Thanks all. Derrick W. Swing Human Resources Manager Human Resources Department City of Asheville P.O. Box 7148 Asheville, N.C Think Green! Please do not print this unless necessary The Asheville Way: Continuous Improvement, Integrity, Diversity, Safety and Welfare, and Excellent Service From: Barbara Whitehorn Sent: Thursday, March 12, :55 AM To: Chris Corl Cc: Derrick Swing; Frank McGowan Subject: USCC Tip Meeting Chris, To confirm- we met on January 23, 2015 (Friday) to go over the tipping practices in place at the time at the US Cellular Center. Present at the meeting (in my office, CH room 437): Chris Corl, Barbara Whitehorn, Frank McGowan and Karen Gillespie. Karen reviewed with us current practices which included the use of a tip jar, the tips from which were split between seasonal/temporary employees and the non-profit entity providing volunteers, if non-profit volunteers were used at the event. If there were no volunteers, the tips were split among the seasonal and temporary employees according to their role. Frank and I were very specific in our questions to Karen about who receives tips, and how they are counted and distributed. This was of particular importance because we were evaluating the responsibility of the City for reporting tips received by employees to the IRS. At that time, Karen was clear that no full time employees receive tips. Frank and I are happy to provide further information about that meeting, if needed. Thanks, Barbara Whitehorn Chief Financial Officer Director of Finance and Management Services City of Asheville, NC 3
4 Office: (828) Mobile: (828)
5 Ben Fulmer From: Sent: To: Cc: Subject: Thursday, March 12, :14 PM RE: USCC Tip Meeting By the way, Patricia Rosenberg was also in the meeting. From: Barbara Whitehorn Sent: Thursday, March 12, :55 AM To: Chris Corl Cc: Derrick Swing; Frank McGowan Subject: USCC Tip Meeting Chris, To confirm- we met on January 23, 2015 (Friday) to go over the tipping practices in place at the time at the US Cellular Center. Present at the meeting (in my office, CH room 437): Chris Corl, Barbara Whitehorn, Frank McGowan and Karen Gillespie. Karen reviewed with us current practices which included the use of a tip jar, the tips from which were split between seasonal/temporary employees and the non-profit entity providing volunteers, if non-profit volunteers were used at the event. If there were no volunteers, the tips were split among the seasonal and temporary employees according to their role. Frank and I were very specific in our questions to Karen about who receives tips, and how they are counted and distributed. This was of particular importance because we were evaluating the responsibility of the City for reporting tips received by employees to the IRS. At that time, Karen was clear that no full time employees receive tips. Frank and I are happy to provide further information about that meeting, if needed. Thanks, Barbara Whitehorn Chief Financial Officer Director of Finance and Management Services City of Asheville, NC Office: (828) Mobile: (828)
6 Ben Fulmer From: Sent: To: Subject: Attachments: Wednesday, February 18, :24 PM RE: Tipping Ethics Policy Addendum.doc Barbara, I ve attached the addendum to the Ethics Policy to include the tipping exception for US Cellular concessions employees and the Ethics Hotline. What I ve created is pretty basic and straightforward, so let me know if there are formatting changes that you would like for me to make. Thanks! Patricia Rosenberg, CPA Internal Auditor (828) From: Barbara Whitehorn Sent: Tuesday, February 17, :14 PM To: Patricia Rosenberg Subject: Tipping Patricia, Will you write up an addendum to the Ethics Policy allowing for tips only in the case of USCC employees working event concessions? Barbara Whitehorn Chief Financial Officer Director of Finance and Management Services City of Asheville, NC Office: (828) Mobile: (828)
7 Ben Fulmer From: Sent: To: Subject: Attachments: Wednesday, January 28, :37 PM MEMO_tipped employees follow-up MEMO_tipped employees follow-up.doc 7
8 Ben Fulmer From: Sent: To: Subject: Attachments: Wednesday, January 28, :37 PM Document2 Document2.docx 8
9 Ben Fulmer From: Sent: To: Subject: Wednesday, January 28, :03 AM FW: Recommendation for Interim Solution- Seasonal/Part-time USCC employees From: Barbara Whitehorn Sent: Monday, January 26, :36 PM To: Gary Jackson Cc: Paul Fetherston; Sam Powers; Frank McGowan; Chris Corl; Pat Liguori Subject: Recommendation for Interim Solution- Seasonal/Part-time USCC employees Gary, I met with internal stakeholders on Friday to firm up our understanding of the issues with low wage seasonal and parttime USCC employees receiving tips, and to reach an agreeable solution that can be implemented for the remainder of the fiscal year, pending changes from the Class and Comp Study and/or the City Council. History: Last year the Business Process Consulting Team did a process audit of the cash handling practices at the USCC. In their report, they identified that some USCC seasonal and part-time employees were receiving tips that were not being reported to the City for inclusion on those employee s W-2s. The initial recommendation was to report tips as required by the IRS. However, because the current Ethics Policy forbids the receipt of tips by any City employee, it was determined that tipping should be disallowed altogether. This created an issue with turnover and recruitment for these low wage positions. A proposal was brought forward by Chris Corl and Sam Powers to increase the pay rate of these employees. Human Resources recommended against this increase and agreed instead to add the positions to the Class and Comp Study. Current Situation: While the Class and Comp Study may provide a partial solution for these low wage employees, it is nevertheless important that we address the issue of tipping. USCC management has tried to ban tipping with limited success. Even if we forbid tipping, some patrons will insist on tipping their favorite bartender or concessionaire. With a tip reporting policy in place, employees can maintain personal integrity while accepting gratuities from patrons, and the employees and the City will be in compliance with IRS regulations. Recommendation: Allow USCC employees to receive and report tips. Update the Ethics Policy to reflect this change. Create a process for reporting tips to be included in payroll and reported to the IRS. We do not recommend making any wage adjustments to the employees at this time, given the Class and Comp Study currently in progress. Next Steps: If you approve, Finance and the USCC are prepared to issue a memo to affected employees with detailed instructions on reporting tips. Payroll is prepared to handle the tips reported. Finance and the USCC have already developed a process that can be implemented as soon as we receive the go ahead. Thank you, 9
10 Barbara Whitehorn Chief Financial Officer Director of Finance and Management Services City of Asheville, NC Office: (828) Mobile: (828)
11 Ben Fulmer From: Sent: To: Subject: Attachments: Wednesday, January 07, :20 PM Background for you -- just got this yesterday from Carey Calculation to determine filing 8027.xlsx FYI worth reading From: Carey Price Sent: Tuesday, January 06, :20 PM To: Frank McGowan Subject: FW: Follow-Up from Knuckles: Tip Advice Carey Price - CPA Accountant Finance Department City of Asheville (828) (828) fax cprice@ashevillenc.gov From: Carey Price Sent: Wednesday, May 14, :37 PM To: Rhonda Devan Subject: FW: Follow-Up from Knuckles: Tip Advice I thought you might want this as it is history on the tips situation Carey Price - CPA Accountant Finance Department City of Asheville (828) (828) fax cprice@ashevillenc.gov From: Eric Hardy Sent: Thursday, May 09, :20 PM To: Kelley Dickens; Lauren Bradley; Pat Liguori; Carey Perkins Cc: Ashley Barriga; Adam Diaz; Derrick Swing Subject: RE: Follow-Up from Knuckles: Tip Advice All, The following information may be moot if HR concludes that the practice of employees receiving tips conflicts with the Ethics Policy and should be discontinued. However, I offer this report to the group to close the loop. 11
12 In early January, HR and Finance staff members met with USCC management to discuss tips received by USCC event staff. In addition to assessing alignment or conflict with the City s Ethics Policy, the meeting was also intended to address any potential risks associated with the City s Cash Handling policy. One of the concerns arising from the discussion was IRS treatment of tips reporting. Finance staff conducted research and offer the following information: According to IRS Publication 531, Reporting Tip Income (Pub 531) (p 3), employees must report tips to your employer. Tips are not reportable if total tips for any 1 month from any one job are less than $20 (Pub 531, p 4). IRS Publication 15, Employer s Tax Guide (Pub 15) (p 14), states that your employee must report cash tips to you by the 10 th of the month after the month the tips are received. Employers must withhold federal, [state], social security, and Medicare taxes from tips received by employees (Pub 531, p 3; Pub 15, p 14). Employer is also responsible for employer s portion of social security and Medicare (Pub 15, p 14). IRS Form 8027 instructions (Form 8027i) indicate that Form 8027 must be filed by an employer who operates a large food or beverage establishment (p 1). Form 8027i (p 1) defines A large food or beverage establishment is one to which all of the following apply: o Food or beverage is provided for consumption on the premises. o Tipping is a customary practice. o More than 10 employees who work more than 80 hours were normally employed on a typical day during the preceding calendar year. [See attached calculation from the instructions showing that USCC meets this qualification] Form 8027i (p 2) states that employer must allocate tips among employees who receive them if the total tips reported to you during any payroll period are less than 8%...of this establishment s gross receipts for that period. The employer s reporting requirement is not simple, but is not negotiable as we understand the IRS regulations. So long as USCC allows employees to receive tips, I believe the City has a reporting responsibility. I can be talked out of this position, however, and open to discussion should this be necessary. Eric T Hardy From: Eric Hardy Sent: Wednesday, May 08, :58 PM To: Eric Hardy; Kelley Dickens; Lauren Bradley; Pat Liguori; Carey Perkins Cc: Ashley Barriga; Adam Diaz; Derrick Swing Subject: RE: Follow-Up from Knuckles: Tip Advice We have most of the data assembled, and waiting for one more bit of info. So look for our summary tomorrow. Over-promise, under-deliver. DANG! Eric T Hardy From: Eric Hardy Sent: Wednesday, May 08, :03 AM To: Kelley Dickens; Lauren Bradley; Pat Liguori; Carey Perkins Cc: Ashley Barriga; Adam Diaz; Derrick Swing Subject: RE: Follow-Up from Knuckles: Tip Advice 12
13 Thanks Kelley for the great summary. We are summarizing findings from our IRS research and will provide to this group by end of the day. Eric T Hardy From: Kelley Dickens Sent: Tuesday, May 07, :39 PM To: Eric Hardy; Lauren Bradley; Pat Liguori; Carey Perkins Cc: Ashley Barriga; Adam Diaz; Derrick Swing Subject: FW: Follow-Up from Knuckles: Tip Advice All, Given the findings of employees receiving tips at the US Cellular Center, there have been concerns at multiple levels about how to move forward with this information. I understand Finance has been reviewing as well and it is their recommendation to record and report these earnings in the payroll system. On the HR front, we are trying to ensure not only are we compliant with City policy (which currently prohibits this practice) but also the Fair Labor Standards Act (FLSA). To review the FLSA compliance piece I directed HR staff to discuss the matter with a consultant we use (Mark Knuckles) who is a retired Department of Labor Investigator and an expert on the FLSA. Based upon that conversation, I wanted to provide the following summary of that discussion. Mr. Knuckles informed us that the main concern with tip reporting is when employees are paid below minimum wage. HR has confirmed that there are no active employees who make less than the minimum wage of $7.25. He emphasized that if the employee makes more than minimum wage, the tips belonged to the employee. In addition, he shared that there are provisions for employee making at or close to the minimum wage who are required to wear a certain uniform (this does not include casual clothes but rather something with a logo), then the deducting the cost of this uniform from their wages may be an unlawful deduction. The cost of this uniform should be factored into their actual rate. I don t think this is a practice we have in place, but if it is, we would want review. Mr. Knuckles also informed us that an organization cannot deduct any amount the cash register is short if the deduction would take the employee s pay below the minimum wage. Again, this would be an unlawful deduction. Overall, based on FLSA, he did not see a reason why we needed to record tips as the employer. He stated that this was the employee s responsibility when reporting income for taxes. Based on this information, I would recommend that if we do not have to record such earnings, we should not. The consultant was going to look into the IRS laws/regulations a bit further and follow-up with any other findings and Finance staff may have already done this as well so I d be happy to learn about what has been uncovered with regards to IRS reporting requirements. I wasn t sure who all to copy in on this so if I left someone off, I apologize and feel free to forward to those you wish to have this information to review. Thanks! Kelley C. Dickens Human Resources Director City of Asheville Phone: Fax: Kdickens@ashevillenc.gov Our Quality of Service, Your Quality of Life 13
14 Ben Fulmer From: Sent: To: Subject: Attachments: Wednesday, October 22, :11 AM Re: PT Concession staff raises image001.jpg; image002.png; image003.jpg; image006.jpg Thanks Sent from my iphone On Oct 22, 2014, at 10:10 AM, "Chris Corl" wrote: Just FYI, I ve talked to Cathy a few times about the staff raises and she s going to bat for us to try and pull this off. Chris Chris Corl General Manager U.S. Cellular Center Asheville ExploreAsheville.com Arena --Thomas Wolfe Auditorium (o) <image001.jpg> <image002.png> <image003.jpg> ccorl@ashevillenc.gov (c) <image006.jpg> From: Cathy Ball Sent: Wednesday, October 22, :53 AM To: Kelley Dickens Cc: Ashley Lategan; Chris Corl; Sam Powers; Paul Fetherston; Barbara Whitehorn Subject: Re: PT Concession staff raises Kelley, I am wondering if there is another option. Since we have the money, could we just give the increase for the employees who are correctly employed but the new hires would not get the increase so the base rate would not change. I am very concerned about loosing existing employees. I am thinking this would not impact the comp plan but just make a one time adjustment. For your consideration, Cathy On Oct 15, 2014, at 3:13 PM, Kelley Dickens <KDickens@ashevillenc.gov> wrote: All, 14
15 While I understand the concern about the potential impact with the halting of any tipping for such positions, I am not comfortable at this point recommending any change in hourly rates to the City Manager. I had reached out to Cathy and Sam in September suggesting we meet to discuss, but since we ve been unable to convene, let me provide some thoughts via . First, we are getting ready to launch a comprehensive classification and compensation study thus my recommendation would be that we allow this process to occur before making any substantial changes to any pay structures. I understand the timeline is not ideal given concerns about staffing, but the recommendations that were sent to HR were not developed and/or supported by use any market data or standard compensation analysis. The suggestions range from $0.65 an hour to $2.15 an hour and one class at 3% change, and I m not sure I follow or understand how these amounts were determined. I am also wondering why a Stock Clerk may need an increase based on the loss of tips, given I would expect that person to not have received tips. Because we are officially kicking off the study this week, our consultants will be on site tomorrow and Friday and it may be an opportunity to discuss this issue with them and ask them to help us identify any potential short-term strategy that could be utilized to address the concerns while trying to minimize the impact to the full review. Second, given the intent to fund these increases through additional revenue that was not budgeted, I m not certain why Finance is indicating this would not need to have City Council approval. I m happy to talk with Barbara and/or Tony about that further if we get to that point, but again I believe additional discussion needs to occur to ensure any recommendation we make to the City Manager is consistent with the overall goals and objectives regarding compensation. I m happy to try and schedule a separate meeting to discuss if necessary, but think this may be best as a discussion point in the meeting with the consultants tomorrow or Friday. Kelley C. Dickens Human Resources Director City of Asheville Phone: Fax: Kdickens@ashevillenc.gov Our Quality of Service, Your Quality of Life Think Green! Please do not print this unless necessary From: Ashley Lategan Sent: Wednesday, October 15, :03 PM To: Chris Corl Cc: Kelley Dickens; Cathy Ball; Sam Powers Subject: RE: PT Concession staff raises Kelley Will you weigh in on this? Ashley Ashley Lategan Compensation & Benefits Manager Human Resources Department 15
16 City of Asheville PO Box 7148 Asheville, NC Work: Cell: Our Quality of Service, Your Quality of Life Think Green! Please do not print this unless necessary From: Chris Corl Sent: Wednesday, October 15, :02 PM To: Ashley Lategan Cc: Kelley Dickens; Cathy Ball; Sam Powers Subject: RE: PT Concession staff raises Ashley, Sam & I have met with Cathy in reference to our temp seasonal staff pay raises. Cathy is supportive of our plan to raise hourly rates and cover the additional costs with revenues generated from the increase in retail pricing at the concession stands. What is our next step in the process? Is it possible to target the pay period of Nov as the first pay period with the new rates? We would need a few weeks lead time to schedule an orientation for all of our Part Time staff to bring them in and advise them of the new changes in policy regarding tips, the plan moving forward and the potential repercussions of accepting a tip. We will also need to have time to schedule meetings with our nonprofit volunteer groups as we ll need to adjust their current contracts to reference donations as opposed to tips and detail out our new plan to collect their donations and add to their payment check after every event as a way to better track their payments for auditing purposes. Thanks, Chris Chris Corl General Manager U.S. Cellular Center Asheville ExploreAsheville.com Arena --Thomas Wolfe Auditorium (o) <image001.jpg> <image002.png> <image003.jpg> ccorl@ashevillenc.gov (c) <image004.jpg> From: Ashley Lategan Sent: Wednesday, September 24, :42 AM To: Chris Corl Cc: Kelley Dickens Subject: Re: PT Concession staff raises Chris -- Kelley was going to discuss this further with Cathy and/or Sam. Kelley -- Please let me know if there is anything else you may need. 16
17 Thanks, Ashley Sent from my ipad On Sep 24, 2014, at 9:44 AM, "Chris Corl" wrote: Hey Ashley, Any update from your talk with Kelly yesterday? Or any additional information I need to pull together to help? I ve talked with Tony in budget and on the finance side they are good with everything and don t see a need to go to council with this (unless there is an HR reason for council with differencing pay scales etc. for similar jobs across the city). Thanks, Chris Chris Corl General Manager U.S. Cellular Center Asheville ExploreAsheville.com Arena --Thomas Wolfe Auditorium (o) <image001.jpg> <image002.png> <image003.jpg> ccorl@ashevillenc.gov (c) <image004.jpg> From: Ashley Lategan Sent: Monday, September 22, :33 PM To: Chris Corl Subject: RE: PT Concession staff raises Chris The main follow up I have now is how you came about the different increases. Did you use any market data? Ashley Ashley Lategan Compensation & Benefits Manager Human Resources Department City of Asheville PO Box 7148 Asheville, NC Work: Cell: alategan@ashevillenc.gov Our Quality of Service, Your Quality of Life Think Green! Please do not print this unless necessary 17
18 From: Chris Corl Sent: Monday, September 22, :24 PM To: Ashley Lategan Subject: RE: PT Concession staff raises Great. Thank you. Just let me know if there is more info that you may need. Chris Corl General Manager U.S. Cellular Center Asheville ExploreAsheville.com Arena --Thomas Wolfe Auditorium (o) <image001.jpg> <image002.png> <image003.jpg> (c) <image007.jpg> From: Ashley Lategan Sent: Monday, September 22, :10 PM To: Chris Corl Subject: RE: PT Concession staff raises Chris, I wanted to give you a heads up that I am meeting with Kelley Dickens tomorrow to discuss this in more detail. Thanks! Ashley Ashley Lategan Compensation & Benefits Manager Human Resources Department City of Asheville PO Box 7148 Asheville, NC Work: Cell: alategan@ashevillenc.gov Our Quality of Service, Your Quality of Life Think Green! Please do not print this unless necessary From: Chris Corl Sent: Thursday, September 18, :13 PM To: Ashley Lategan Subject: RE: PT Concession staff raises Sure thing: I d like to propose changes to the following job codes: 18
19 C137; Stock Room: Rate increase of $2/hr for all persons in this code C547; Event Coordinator: Rate increase of 3% for all persons in this code C580; Bartender: Rate increase of $2.15/hr for all persons in this code C581: Concession Stand Manager: Rate increase of $1/hr for all persons in this code C582: Concessionaire: Rate increase of $1.90/hr for all persons in this code C583: Concession Supervisor: Rate increase of $1/hr for all persons in this code C586: Event Staff: Rate increase of $0.65/hr for all persons in this code *I would like to continue with our current structure concerning annual increases; currently if council approves a cost of living pay increase it DOES NOT apply to our temp seasonal staffing. This process would need to continue. The attached comparison and evaluations are based on FY14 staffing hours and rates, FY14 was our heaviest event year over the last 8 years and total staff hours were significantly higher than normal, thus I felt this is the best way to guarantee that I m factoring in the highest potential additional expense. The above rate adjustments would have a total additional cost to the USCC of $27, (that s factoring in rate changes AND a 12.5% additional comfort cost). We have been in discussion of raising some of our prices at the concession stands during events and we feel confident that our new pricing structure will more than cover staff rate increases. Of our price increases we plan to raise the price of beer from $6 to $7. Just this one single line item will bring nearly $80,000 in additional revenue to the facility. Factoring in the potential for a slower year on the revenue side if we assume a 40% DECREASE in sales, we are still netting roughly $48,000 in additional revenue (just from one line item.) Assuming staff levels stay the same and sales decrease we are still looking at around a $20,000 cushion. When looking at all of our product pricing increases we re slating additional revenue of around $150,000. Although we are moving to higher quality items and more locally based foods our actual take home revenue increase with all of these factors and staffing adjustments should fall between 20-30%. Let me know if you have any questions. This is something I would like to move on as quickly as possible and would love to be able to approach council at the Oct 7, meeting date. Thanks, Chris Chris Corl General Manager U.S. Cellular Center Asheville ExploreAsheville.com Arena --Thomas Wolfe Auditorium (o) <image001.jpg> <image002.png> <image003.jpg> ccorl@ashevillenc.gov (c) <image007.jpg> 19
20 From: Ashley Lategan Sent: Thursday, September 18, :33 AM To: Chris Corl Subject: RE: PT Concession staff raises I would like to talk to Kelley Dickens about it early next week when I return from the conference. Do you have any documentation on (1) what increases you were projecting, (2) the estimated cost of the increase, (3) how the costs will be absorbed, etc? If so, please send it my way so I can talk to her when I return. Thanks! Ashley Ashley Lategan Compensation & Benefits Manager Human Resources Department City of Asheville PO Box 7148 Asheville, NC Work: Cell: alategan@ashevillenc.gov Our Quality of Service, Your Quality of Life Think Green! Please do not print this unless necessary From: Chris Corl Sent: Wednesday, September 17, :59 AM To: Ashley Lategan Subject: PT Concession staff raises Hey Ashley, Just checking in Re; raises for our concession part time raise conversation. Like I mentioned this is something we need to move on quickly and at the latest I believe we would need to be on council agenda for the Oct 7 meeting which would require us to have all of the necessary information put together by Friday the 26 th. Thanks, Chris Chris Corl General Manager U.S. Cellular Center Asheville ExploreAsheville.com Arena --Thomas Wolfe Auditorium (o) <image001.jpg> <image002.png> <image003.jpg> ccorl@ashevillenc.gov (c) <image007.jpg> 20
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